Russell® Stability Indexes™
The Third Dimension of Style™
Russell® Stability Indexes™ are style-based benchmarks that offer more detail and specificity for investors, and adds a third dimension to the Russell Style Indexes, independent from other definitions of style (i.e. growth and value).
The indexes measure a portion of the market based on the sensitivity to economic cycles, credit cycles, and market volatility, referred to as stability.
Stability is measured at the company level in terms of volatility (price and earnings), leverage, and return on assets. The more stable half of the index is called the Defensive Index® and the less stable half is called the Dynamic Index®.
More insights into style
In addition to the standard, market-oriented Defensive and Dynamic Indexes®, combined style indexes are also available to provide even greater insight on growth and value market performance. The Growth-Defensive, Value-Defensive, Growth-Dynamic, and Value-Dynamic indexes demonstrate the complementary nature of the third dimension of style.
More than low volatility.
Russell is one of the first to combine quality indicators (balance sheet and earnings-related measures) and a stock market indicator, volatility. As a result, Russell Stability Indexes are more comprehensive than other indexes that historically focus on single measures such as dividends or return volatility.
Distinct from other asset classes.
In certain market conditions, the Russell Stability Indexes capture a different set of indicators that are driving market and manager performance.
Complete market coverage.
Russell Stability Indexes are created from existing Russell Indexes that are split to form a Defensive half (more stable) and a Dynamic half (less stable). Taken together, these halves offer a more accurate picture of market activity.
Attractive to both active and passive money managers.
Indexes containing Dynamic stocks provide potential opportunities for greater return generation via active management, albeit with greater risk factors. Indexes containing Defensive stocks give "buy-and-hold" investors a fully transparent, reliable benchmark for long-term investing.
Russell Stability Indexes are broadly defined in terms of number of holdings and factor exposures. They are cap-weighted, have low turnover rates and are reconstituted annually.
Russell collects a broad range of data, including daily corporate actions, monthly share adjustments, quarterly IPO inclusions and annual total reconstitution to ensure the indexes represent the true opportunity set.
Created by experts.
With clients in more than 35 countries, Russell combines global experience with expertise in equity index construction and manager evaluation to create world-class global investment tools.